A Stock Is Expected to Return 11% in a Normal

question 97

Multiple Choice

A stock is expected to return 11% in a normal economy, 19% if the economy booms, and lose 8% if the economy moves into a recessionary period. The economists predict a 65% chance of a normal economy, a 25% chance of a boom, and a 10% chance of a recession. What is the expected return on the stock?

• A) 11.98%
• B) 12.06%
• C) 11.10%
• D)11.23%

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Definitions:

Particular Commodity

Refers specifically to a unique or specified commodity traded on commodity markets, such as gold, oil, or wheat.

Reaffirmation Promise

A commitment to maintain or adhere to an agreement or obligation, especially after a challenge or dispute.

Debts Barred

Relates to debts that cannot be legally recovered due to the expiration of a statute of limitations.

Statutes Of Limitations

Laws that set the maximum time after an event within which legal proceedings may be initiated, thus limiting the duration a party can be sued or charged.